BREAKING NEWS! (keep refreshing) The deal is finally done, and Warner Bros’ highly anticipated Watchmen — based on the comic book series/graphic novel written by Alan Moore and illustrated by Dave Gibbons — won’t be held hostage. I’m hearing that in tonight’s settlement, Fox will not be an active distributor of the pic, but will receive up to 8 1/2% gross participation in the pic, and a piece of everything going forward including a sequel or spinoff, and a cash payment upfront including recoupment of its development costs and attorney fees, and god-only-knows what else. Because neither Fox nor Warner Bros would comment on the terms. But Legendary Pictures already owns a chunk of Watchmen. So cutting Fox in now as another partner really plays havoc with Warner Bros’ economics on the movie. Studioshate when that happens.

[FYI, The Hollywood Reporter jumped the gun on this settlement story and got it wrong. Twice in one week for the two trades. Though THR posted at 5:25 PM PT that the deal was done, the fact is that my sources said important issues had yet to be resolved. Only at 7:15 PM was the studios’ settlement concluded. Also THR claimed at first that Fox didn’t get a piece of Watchmen going forward in a sequel or spinoff. But the trade corrected this at 8:30 PM.]

The settlement will be presented on Friday at 9:30 AM to federal judge Gary Feess who set this in motion in the first place by letting all sides know in December that he intended to side with Fox’s claims against Warner Bros for copyright infringement and distribution rights on Watchmen. This is a case where producer Larry Gordon’s hot property changed hands again and again since the late 1980s from Fox, to Universal, to Paramount, until finally to Warner Bros and Legendary Pictures which together went forward with the $130 million film despite knowing that Fox had claims which led to the lawsuit. The next legal step might have been an injunction against Watchmen‘s March 6th release. Initially, Warner Bros said it would fight Feess’ intention to side with Fox and appeal.

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But then, according to my sources, Warner Bros boss Barry Meyer stepped up and stopped that, and his studio finally started talking settlement with Fox last week. So now, Warner Bros can release Watchmen domestically as planned, and Paramount (which also had to sign off on the settlement) play it internationally, and Fox reap the rewards, and fans of the comic book series/graphic novel can rejoice — or find something else about the movie to bitch about…

Need I remind that this isn’t the only controversy in which Watchmen has been embroiled. Though the film’s footage that has been shown has garnered high marks from fans, director Zack Snyder’s admission that he’s changed the ending has rankled many — and he’s also been dismissive of anyone who considers that a big deal. And Watchmen fans appreciated the irony of Warner Bros being hit with a lawsuit over the rights to the movie because it was DC Comics’ screwing of Watchmen writer Alan Moore over both the merchandising rights and a rights-reversion clause to his comics that resulted in his putting a curse on the movie.

UPDATE: Here is the statement by the two studios purporting to show that all is forgiven between them after months and months of nasty back-and-forth battling:

“Warner Bros. and Twentieth Century Fox have resolved their dispute regarding the rights to the upcoming motion picture Watchmen in a confidential settlement. Warner Bros acknowledges that Fox acted in good faith in bringing its claims, which were asserted prior to the start of principal photography. Fox acknowledges that Warner Bros. acted in good faith in defending against those claims Warner Bros. and Fox, like all Watchmen fans, look forward with great anticipation to this film’s March 6 release in theatres.”

Well, as long as the movie is out on March 6, I don’t care how my $10 gets divided among the studios. This is a victory for the fans.

anotherwgamember • on Jan 15, 2009 7:18 pm

I was hoping they’d go after each other, tooth and claw; sort “What would Kyser Soze do?”

First off, it would be fun to watch (I was recommending Warners threaten to move their big tentpole films right into the same weekends as the big Fox films, sort of shoving a tentpole up their butts unless they backed off. Second, if the two studios were fighting, it would be the beginning of a Helter Skelter which could lead to the downfall of the AMPTP.

Sadly, calm has been restored and nobody but the beancounters and sharks win (but that’s Hollywood, folks.)

Brian • on Jan 15, 2009 7:18 pm

Sequels/Spinoffs? Have you (or anyone involved) read the book/script/heard how the movie ends? There’s nothing to spinoff, nothing to add to. I mean, I know Hollywood’s crazy for unnecessary sequels, but I would be truly shocked if that happened in this case.

a 20 year hollywood veteran • on Jan 15, 2009 7:18 pm

I am acting in good faith when I claim this statement makes me want to puke.

HoopersX • on Jan 15, 2009 7:18 pm

Well maybe now the fanboys can finally stop with all the nonsense about Fox being the evil empire. The statement looks like it answers the big question of when it was that Fox informed WB about their rights, BEFORE production.

“…and fans of the comic book series/graphic novel can rejoice (or find something else about the movie to bitch about…”

lol becuase it is so very true. Just enjoy the flick people.

Ron • on Jan 15, 2009 7:18 pm

So puke, veteran. It would be no different from what Hollywood puts out.

Anonymous • on Jan 15, 2009 7:18 pm

It was all FAKE!!

Geez you people are dumb.

Jacob • on Jan 15, 2009 7:18 pm

“Sequels/Spinoffs? Have you (or anyone involved) read the book/script/heard how the movie ends? There’s nothing to spinoff, nothing to add to.”
Yeah I was kinda confused about that too. I guess it’s referring to Tales of the Black Freighter?

JD • on Jan 15, 2009 7:18 pm

Yep. Money talks in this town. I can’t wait for the “Law & Order” episode that will be inspired by this nutty court case.

RJ.B • on Jan 15, 2009 7:18 pm

I think we need the real deal Nikkinsider scoop on this one. Namely, if establishing chain of title is Producing 101 (and it is, literally), why would Warners ever proceed with production when Foxx had come to them straight up and claimed ownership of the property? And continue to ignore them up till less than 2 months before release, only to give up 8.5 gross pts et al for no effort?? What’s the logic?

They can’t be expecting to drop a New Line on Foxx like they was Tolkiens when this movie blows up big as 300… If there’s anyone that can figure out what these braindead poopsters were thinking when they bungled this jobbo, it’s Nikki.

Tinker Tailor • on Jan 15, 2009 7:18 pm

Brian, I was thinking exactly the same thing. There is no possible sequel here, even it performs well which it won’t. For those who’ve never read Watchmen, it would be akin to doing a Titanic sequel.

But it’s all moot. This movie is going to tank big time.

Downtown • on Jan 15, 2009 7:18 pm

to Brian,

300 is getting a sequel/prequel/followup and that had a more definitive ending than Watchmen. If it’s a huge success maybe they’ll give it a prequel. But I think Watchmen will bomb so it won’t matter.

Gaurav • on Jan 15, 2009 7:18 pm

how much cash does Fox get beyond the 8.5%

while the watchmen seems like a great project there is no saying how well it will travel unless marketed as a summer flick (so it shouldn’t be too heavy)

it does not have an internationally recognized character a la Batman fronting it.

cst • on Jan 15, 2009 7:18 pm

Sequels to a sequel-proof book? Of course.(When David Morell sold the film rights to his novel FIRST BLOOD, his agent told him that, as his first deal, he wouldn’t get much- but if they made sequels, he’d clean up big. Morell thought this was a bad deal… because Rambo DIES at the end of the novel.We all know how THAT one turned out…)

Rob J. • on Jan 15, 2009 7:18 pm

Does Fox realize that there should not in any way ever be a sequel (or even a prequel) to Watchmen, no matter how good the movie might be? Now they’re going to have to settle with the fans.

None of this will matter ist Watchmen will make enough money.
(Wich I also am unsure about, though I’m certainly looking forward to it)

Elaborate Calculator • on Jan 15, 2009 7:18 pm

Regarding the “sequels/spinoffs” clause, the fact that the original graphic novel ending pretty much precludes a sequel unfortunately doesn’t mean they can’t make one- remember, one of the comic fans’ bugbears is that the ending has been changed.

Still looking forward to it though…

Warner Borg • on Jan 15, 2009 7:18 pm

I’m totally bewildered when people say this film was ever in doubt of being released on time. Hollywood is nothing if consistent.

Never let a blood feud get in the way of a making money. All the studios have a ‘mutual destruction’ agreement much like the Cold War. They may hate each other with a hatred that burns like the Sun but they have to make money baby.

And as for all this talk of Watchmen bombing, again, I don’t get it. Watchmen doesn’t have the ‘lightning in a bottle’ that The Dark Knight had…. but it has something.

A big (but not 300-esque record breaking) opening weekend when all the kids go to see it followed by a big drop off but solid performance for the next six weeks as the older fans go and see it.

I’m calling it now.

$35-50m Opening weekend.

$120-150 final US gross.

Armand • on Jan 15, 2009 7:18 pm

I can’t help to wonder what happens if Watchmen bombs? I mean, all this hoopla over a movie that has yet to prove itself over any sequel or prequel, & a comic book that is only known within the circles of its readers.

I kind of had to agree over the ruling that somehow, since Fox owned the rights, they are entitled to the shares of the profits. But if it bomb, Fox will get off easy. How very nice!

Anonymous • on Jan 15, 2009 7:18 pm

i really want to know if the biz affairs person on this deal we as the same genius that did dukes of hazzard for warners, and if so, why weren’t they fired for that fiasco and why havent they been fired for this one. it’s truly amazing that a screw up of this level could happen at a studio.